Many Happy Returns Your Portfolio Wasn't Built for This
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Mar 25, 2026 They argue many portfolios were built for falling rates and cheap oil, which no longer applies. They explore why 60/40 can fail when stocks and bonds fall together and revisit 2022’s historic drawdown. They weigh short-duration cash, inflation-linked bonds, commodities, gold, and trend funds as potential hedges. They also discuss energy’s small index weight, tech’s energy vulnerability, and the costs of commodity hedging.
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Avoid Long Duration If You Fear Inflation
- Avoid long-duration bonds if you fear inflation shocks and rising yields.
- Ramin kept his 40% in short-duration money market funds to sidestep duration losses during the 2022 inflation spike.
Ramin's Short Duration 40 Percent Worked In 2022
- Ramin describes his personal 60% equity and short-duration 40% cash/money market approach.
- That allocation avoided the heavy bond losses when yields spiked in 2022, leaving his bond sleeve largely unscathed.
Why Inflation Breaks The 60-40 Hedge
- Inflation is toxic to both stocks and conventional bonds because it erodes coupons and corporate margins.
- Higher inflation raises input costs and prompts central banks to hike rates, which discounts equity cash flows and lowers bond prices.
